How Driverless Cars Will Radically Change Every Aspect of Our Lives

Good driver discounts? Accident premium hikes? These are about to go extinct, along with a good portion of auto insurance profits. Because in just three years’ time, driverless cars are going to start hitting the roads and reshaping a host of industries -- not to mention all of our lives.

But before we look at how, exactly, our lives will change, let’s explore a curious feature of this radical innovation: it’s coming primarily from outside the auto industry itself.

Two days ago, Tesla released autopilot software for its Model S cars that allows for hands- and feet-free driving in either stop-and-go traffic or highway speeds. It does not yet allow for fully-autonomous driving not because of any technical constraints — the tech is already there and ready to go — but simply because of regulatory and insurance concerns. Tesla said it plans to release its first fully-driverless car in three years.

Meanwhile, technology giants Google and Apple are also furiously at work on their own autonomous vehicles. Reporting from last month’s Frankfurt International Motor Show, The New York Times noted that “Along with Google, Apple has focused the minds of auto executives on the challenge posed by new technologies that have the potential to disrupt traditional auto industry hierarchies.”

Think it can’t happen? Think again. It's the tech companies, not automakers, who've been driving the rapid development of intelligent dashboards in recent years. Then there's the fact that Google is worth five times more than any auto company on the planet. As for Apple, it’s worth a whopping eight times more than any car company, and it also has the proven technological and cultural capacity to utterly transform the auto industry just like it did the mobile phone and recorded music industries.

In contrast to this breakneck innovation by outsiders, the traditional auto industry itself seems largely stuck in a defensive crouch. What does it say about the auto industry’s attitude towards innovation that a premiere carmaker like Volkswagen was willing to bet its entire future on an emissions-control scheme just to save the $4 billion it would have cost to R&D a real solution to the emissions problem?

Whatever you think of Apple, Google, or Tesla and their various corporate missteps, can you imagine any of them ever behaving like this?

In the end, VW will now have to spend at least $40 billion to repair the flawed emissions systems in its cars, compensate customers for the fact that their cars have depreciated 25 percent overnight, and settle the tsunami of lawsuits soon to come crashing down upon their corporate headquarters in Wolfsburg, Germany.

That’s a 10-to-1 loss caused by the failure to innovate. And when you add to the VW scandal the lethal ignition switch fiasco at General Motors and similar industry foot-dragging going back at least 40 years to the exploding gas tanks in Ford’s Pinto, it seems pretty clear that we’re looking at an industry not run by innovators.